NZ trusts linked to Panama papers scandal

by NZ Lawyer04 Apr 2016
New Zealand trusts have been found to be at the centre Panama papers scandal by law firm Mossack Fonseca.

According to a report by Stuff this morning, the criminal underbelly of the tax haven industry has been using New Zealand to hide their wealth, and the country has fought hard to keep foreign profits tax-free and invisible for beneficiaries of offshore trusts.

Most of the offerings provided by the off shore industry are legal, provided they are used by law abiding customers, the ABC reported.
The details of the 200,000 companies registered by Mossack Fonseca have emerged from 11.5 million tax haven records, obtained by German newspaper Suddenusche Zeitung and investigated by the International Consortium of Investigative Journalists.

A Stuff report has revealed that Mossack Fonseca set up a New Zealand trust for a client titled Humanitarian Intervention Relief and Research Trust with a Panama company, the chief beneficiary would be Gabriel Jose Pretus Becerra.

Becerra “had been prosecuted by the Criminal Court of Spain for a presumable fraud and money laundering, but the Court ruled in favour of Becerra absolving him from any charge”, a Mossack Fonseca operative noted.

The report by Suff has also revealed that Mossack Fonseca set up two Panama companies back in 2013, outwardly controlled by a Mossack Fonseca firm, ATC Administrators.  But these two companies were in reality controlled by Malta’s energy minister, Mizzi and the other by the Malta PM’s chief of staff, Schembri.

The companies were dormant until 2015 when Mossack Fonseca set up the Rotora Trust for Mizzi and the Haast Trust for Schembri, with the ownership of the two Panama companies transferred to the trusts, which faced no tax scrutiny in New Zealand of any Panama income.

Mossack Fonseca then applied for Dubai bank accounts for the two companies which was knocked back for several reasons but principally because the Ultimate Beneficial Owners were Politically Exposed Persons.

“As both settlors [that is, the parties that set up the trust] are PEP, our NZ colleagues need to be comfortable that sufficient due diligence has been carried out to ascertain that funds being settled are not subject to any corruption risk, and ideally that they come from income generated prior to the settlors' political appointment,” a Mossack Fonseca operative in Panama wrote.

“With respect to Haast Trust, it would appear that there was some negative coverage regarding the tender process for supply of paper to the government shortly after the settlor's appointment as Chief of Staff, so if you could also include a detailed information about this, that will be a very important information for us as well.”

Stuff reported that the documents showed that the firm was concerned with being able to show they had taken steps to verify their clients.
“My New Zealand-based trust, together with any attached company, which has not traded so far, was opened as a contingency for this reason upon advice from my financial advisers,” Schembri told journalists in Malta earlier this year.

“I will also be asking a reputed auditing firm, independent of my financial advisers, to audit the New Zealand-based trust and related operations, and will make this report available to the media.”